Aaryamann Shrivastava
FXStreet
- Filecoin price has been on a downtrend for the last two weeks falling by 34.46% to trade at $5.95.
- The downtrend coming to an end would allow FIL to bounce off the critical support and run up by 17%.
- However, if the altcoin loses the support of $5.46, it is susceptible to invalidating the bullish thesis.
Filecoin price followed the broader market bullish lead over the last 24 hours following the Federal Reserve Chair Jerome Powell’s comments. The red candle posted subsequently further added to the ongoing bearishness on the charts. However, it may not last for long as indicators point towards a change in trend.
Filecoin price preparing for recovery
Filecoin price has been inching closer to its critical support for days now and is now right at the cusp of testing it as support. The consistent corrections have resulted in the altcoin falling by almost 34.5% in the span of 14 days. But as FIL comes closer to testing the 100-day Exponential Moving Average (EMA), it may be able to bounce back into recovery.
The downtrend noted on the asset has been losing strength for days now. Evidence of the same can be found on the Average Directional Index (ADX), which at the time of writing was at the threshold at 25.0. If the indicator slips below this line, the active downtrend noted on the Parabolic Stop and Reverse’s (SAR) presence above the candlestick would not be strong enough to pull Filecoin price down any further.
FIL/USD 1-day chart
Thus if FIL manages to bounce off the critical support at $5.46, bulls will have an opportunity to pull the altcoin back into recovery. Traders should note that the altcoin would be safe from a sudden correction once it breaches the critical resistance at $6.59, this would allow the Filecoin price to rally beyond $7.
Nevertheless, given the uncertainty in the market at the moment, the Filecoin price is also vulnerable to dipping below the critical support. Plus, if ADX bounces off the 25.0 threshold and registers an uptick, it would denote that the downtrend is getting stronger. This would result in the altcoin invalidating the bullish thesis and declining to $4.79, registering a 15% crash.
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